Celestica (CLS) risk factors, FY2025 10-K

Risks Related to Our Business and Operations

1. 01We are dependent on a limited number of customers and end markets and are sensitive to their investment cycles and operating conditions. Revenue decline or loss of any major customer could have a material adverse effect on our operating results, financial position and cash flows71% rewritten
2. 02Inherent challenges in managing changes in customer demand has and may continue to impact our planning, supply chain execution and manufacturing, and may adversely affect our operating performance and results27% rewritten
3. 03We are dependent on our customers' ability to compete and succeed in the marketplace using products we manufacture and services we provide39% rewritten
4. 04Our exposure to financially troubled customers or suppliers has and may continue to adversely affect our financial results39% rewritten
5. 05We are dependent on third parties to supply certain materials, and our results were negatively affected by the availability of such materials in the past and may be negatively affected by the quality, availability and cost of such materials in the future79% rewritten
6. 06Our products and services involve inventory risk
7. 07A change in the mix of customers and/or the types of products or services we provide could have a material adverse effect on our financial condition and operating results
8. 08Challenges associated with new customers or programs, or the provision of new services, could adversely affect our operations and financial results
9. 09Customer relationships with emerging companies may present more risks than with established companies
10. 10If we are unable to recruit or retain highly skilled talent in key jurisdictions and within desired timeframes, our business could be adversely affected
11. 11Our revenue and operating results may vary significantly from period to period21% rewritten
12. 12Increased capital expenditures to expand capacity to support anticipated growth in customer demand may not proceed as anticipated and may increase our fixed‑cost base, constrain liquidity and adversely affect returnsNew
13. 13We may encounter difficulties expanding or consolidating our operations or introducing new competencies or new offerings, which could adversely affect our operating results57% rewritten
14. 14from realizing the anticipated benefits of growth in new markets or technologies, which could materially adversely affect our business and operating resultsNew
15. 15Quality and execution issues may reduce demand for our services, damage our reputation, and/or have a material adverse effect on our business and operating results
16. 16Our operations have been and could continue to be adversely affected by events outside our control24% rewritten
17. 17Our operations and our customer relationships may be adversely and materially affected by disruptions to our IT systems, including disruptions from cybersecurity breaches of our IT infrastructure
18. 18Our business is dependent on us winning competitive bid selection processes
19. 19Changes to our operating model may adversely affect our business
20. 20Adoption, integration and use of AI in manufacturing and service offerings and in certain of our internal processes may present regulatory, ethical, data and cybersecurity risks and result in reputational harm or liabilitiesNew
21. 21We may encounter integration and other significant challenges with respect to our acquisitions and strategic transactions which could adversely affect our operating results
22. 22Transfers of business or operations have increased and may again increase our costs and cause disruptions in our ability to service our customersNew
23. 23Our business could be impacted as a result of actions by activist shareholders or others
24. 24Climate and weather-related risks could adversely affect our business, results of operations and financial conditionNew

Risks Related to Our Industry

1. 25The future development and adoption of AI and the deployment of data center infrastructure are uncertain and depend on the availability and cost of critical inputs (including power and water), which could materially affect demand for our products and services and our operating resultsNew
2. 26We operate in an industry comprised of numerous competitors and aggressive pricing dynamics
3. 27We may not keep pace with rapidly evolving technology33% rewritten
4. 28The semiconductor industry is cyclical and volatile in nature56% rewritten

Risks Related to the International Nature of our Business

1. 29We continue to operate in an uncertain global economic and political environment64% rewritten
2. 30services to date, unrecovered increased operating costs in future periods would adversely impact our margins. We cannot predict future trends in the rate of inflation or other negative economic factors or associated increasesNew
3. 31A decline in the U.S. and other government budgets, changes in spending or budgetary priorities, or delays in contract awards may adversely affect our future revenue and limit our growth prospects
4. 32Our ability to successfully manage unexpected changes or risks inherent in our global operations and supply chain may adversely impact our financial performance35% rewritten
5. 33Geopolitical uncertainty and conflicts may adversely affect our business, financial condition and results of operationsNew
6. 34We are exposed to translation and transaction risks associated with foreign currency exchange rate fluctuations; hedging instruments may not be effective in mitigating such risks

Financial Risks

1. 35Deterioration in financial markets or in the macro-economic environment may adversely affect our ability to raise funds or increase the cost of raising funds
2. 36Volatility in energy and commodity prices may negatively impact our operating results
3. 37Our results may be negatively affected by rising labor costs
4. 38We are subject to financial and reputational risk due to non-performance by counterparties28% rewritten
5. 39We may use cash on hand, issue debt or equity securities, and/or incur additional third-party debt (or any combination thereof) to complete future acquisitions or otherwise fund our operations, which may adversely affect our liquidity, credit ratings, financial condition and/or results of operations
6. 40We are subject to interest rate fluctuations
7. 41We have incurred impairment charges and operating losses in certain of our businesses, and may incur such charges and losses in future periods
8. 42We are subject to the risk of increasing income and other taxes, tax audits and the challenges of successfully defending our tax positions, and obtaining, renewing or meeting the conditions of tax incentives and credits, any of which may adversely affect our financial performance49% rewritten
9. 43have tax laws with detailed transfer pricing rules which require that all transactions with non-resident related parties be priced using arm's-length pricing principles, and that contemporaneous documentation must exist to support such pricingNew
10. 44We may not be able to prevent or detect all errors or fraud
11. 45We have entered into the TRS Agreement in respect of our Common Shares, which exposes us to certain risks, including Common Shares price decrease risk, counterparty risk and interest rate risk, any of which could adversely affect our financial condition and/or financial results
12. 46Our credit ratings may be downgraded
13. 47Our credit agreement contains restrictive and financial covenants that may impair our ability to conduct business, and the failure to comply with such covenants could cause our outstanding debt to become immediately payable
14. 48We have incurred third-party debt for which our debt service requirements may reduce our ability to fund future acquisitions and/or capital expenditures, and may have other adverse impacts on our business
15. 49We anticipate that we will refinance outstanding indebtedness from time to time, and an inability to refinance on favorable terms, or at all, would have a material adverse effect on our operating results and financial condition
16. 50We may be required to make larger contributions to our defined benefit pension and other benefit plans in the future
17. 51Changes in judgments, estimates and assumptions could have a material effect on our financial position and results of operations

Legal/Regulatory Risks

1. 52We may not adequately protect our IP or the IP of others
2. 53U.S. policies or legislation could have a material adverse effect on our business, results of operations and financial condition43% rewritten
3. 54There may be issues with the products we design or manufacture that could result in liability/warranty claims against us, which may reduce demand for our services, damage our reputation, and/or cause us to incur significant costs
4. 55Any failure to comply with customer-driven policies and standards, and third party certification requirements could adversely affect our business and reputation62% rewritten
5. 56Compliance or the failure to comply with governmental laws, regulations, and obligations could be costly and may negatively impact our financial performance
6. 57In addition, whenever we pursue business in new end markets, or our customers pursue new technologies or businesses, we are required to navigate the potentially heavy regulatory and legislative burdens of such end markets or technologies, as well as applicable quality standards with respect thereto
7. 58We are subject to litigation and proceedings, which may result in substantial expenses, settlement costs or judgments, require the time and attention of key management resources, and result in adverse publicity, any of which may negatively impact our financial performance
8. 59Compliance or the failure to comply with employment laws and regulations may negatively impact our financial performance
9. 60Changes in accounting standards enacted by the relevant standard-setting bodies may adversely affect our reported operating results, profitability and financial performance
10. 61Potential unenforceability of judgments
11. 62Our business and operations could be adversely impacted by sustainability initiatives53% rewritten

Risks Related to our Common Shares

1. 63The market price of our Common Shares has been volatile22% rewritten
2. 64There can be no assurance that we will continue to repurchase Common Shares for cancellation
3. 65Potential dilution from equity compensation and other share issuancesNew
4. 66Negative publicity could adversely affect our reputation as well as our business, financial results and the price of our Common Shares